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Interaction | February 2014

We plan to award five projects worth Rs 500 crore this year

Ennore Port, which plans to raise Rs 500 crore via tax-free bonds, is gearing up for capacity addition, taking the port's capacity to 65 mtpa by the end of 2017. The port has already awarded a few projects and is likely to award a few more by this year. In an exclusive interview, MA Bhaskarachar, Chairman and Managing Director, Ennore Port Ltd, outlines the port's plans to RAHUL KAMAT.  

The Ennore Port model claims to be different from most of the other major ports in the country. How is it different?
 We have limited experience operating in the port sector. We currently operate on the landlord model wherein cargo operations are vested with build, operate and transfer (BOT) operators and a captive user. The obligation to bring in related cargo handling operations, and ensure efficiency in operation and management is passed onto individual BOT operators and the captive user. The port only provides basic infrastructure and allied services.Since we operate on landlord model type management, we have very low manpower cost. As on September 2013, our full-time employee strength was 101. Interestingly, due to this model, we have no compulsion to engage any large labour force as we do not come under the Indian Ports Act. Any major work dredging, and rail and road connectivity has been contracted to third-party contractors. Therefore the port is not affected by issues such as availability, quality and cost of labour. Since Ennore Port is a corporatised port and enjoys the status of a major port, it is not regulated by the Tariff Authority of Major Ports (TAMP). Our ability to determine tariff rates helps us to compete effectively with other ports in the country. Being autonomous gives us a free hand in operational and spending flexibility.


Since there has been growing demand from your captive users and BOT operators, which are the projects that will be undertaken in the near term? How will you finance these projects?
 As of now, we have plans for five major projects phase II of capital dredging, coal berths for Tamil Nadu Generation and Distribution Corporation (TANGEDCO) and National Thermal Power Corporation (NTPC), augmenting rail-road connectivity, development of liquefied natural gas import terminal by Indian Oil Company Ltd (IOCL), and development of a container terminal and a multipurpose cargo terminal of 2 mtpa. The cost for the first three projects is around Rs 500 crore, and we are planning to raise funds via tax-free bonds to suffice the need. In and all, with the commencement of these projects, the port's current capacity, which is 35 mtpa, will be increased up to 65 mtpa by the end of the Twelfth Five Year Plan.


What are the current ongoing activities pertaining to these five projects? Have you started the tendering process?
 The proposed coal berth for TANGEDCO will have a capacity of 9 mtpa. The project has already been awarded to ITD Cementation India for a total cost of Rs 190 crore. The company is in the process of obtaining environmental clearance and approval from the concerned ministries. The construction of the third coal berth will commence this year and will be completed in 2015-16.For the development of LNG terminal, we have already received approval from the Ministry of Environment and Forests (MoEF). The proposed terminal, which will be taken up by IOCL, would be used to import LNG, storage and the regasification with an initial capacity of 5 mtpa with expansion capabilities of up to 10 mtpa.Other than these two projects, we are also developing a container terminal with a capacity of 1.4 million TEUs through public-private partnership (PPP) mode. The project has been awarded to Adani Ports and SEZ Ltd. Meanwhile for the development of the multi-purpose cargo terminal, we have received six bids of which one player has submitted their financial bid. As of now, I will not be in a position to divulge more details on this. The cost of the project is Rs 151 crore and the capacity will be 2 mtpa. Even this project will be built on PPP mode.


The current infrastructure at Ennore permits a maximum draft of 13.50 m at all berths. Larger cape-sized vessels may turn their back because of this. In this regard, what are your plans for capital dredging activities?
 The port has undertaken various capital dredging activities. Phase I has been completed and we are currently in the midst of completing Phase II. In fact, we have also proposed Phase III of development. Once the dredging work is completed, the deep draft at the channel will be increased to the depth of 20 m. This will allow new generation vessels [cape-sized vessels] to access our port.


The total cost of the project [Phases II and III] is Rs 300 crore. The port is planning to invest Rs 100 crore in road and rail connectivity projects. Can you shed light on these projects?
 For rail connectivity, we are proposing to take up the 30 km chord line greenfield project connecting Avadi/Thiruvallur to Attipattu station in Tamil Nadu. The proposed railway link would bypass the critical section from Avadi to Chennai, which is highly congested with traffic. We are also planning to provide rail connectivity to the proposed container terminal from the Indian Railways mainline for rail movement of container traffic from the port. The estimated cost of the project is Rs 36 crore and completion is to be synchronised with completion of the container terminal project. We have submitted the detailed project report (DPR) to Southern Railways for approval. On the road connectivity front, we have proposed an access road on the northern part of the port, which will be an important link between the port and TPP Road near Vallur and then on NH5 (Chennai-Kolkata corridor). This will provide 21.15 km direct connectivity to the Chennai metropolitan area and the deep hinterland.


The Government of Tamil Nadu is currently in the process of acquiring land for the project. Ennore also has plans to convert iron ore berth into coal handling. What was the rationale behind this? When is the clearance expected?
 We are working towards converting the existing 6 mt iron ore berth into coal handling, and we are expecting the clearance by May. The clearance was required because there are some issues with the concessionaires. The conversion is mainly because there is not much hope for iron ore (shipments, given the various legal clamps on its mining and sale), so we are looking at converting the berth to cater to thermal coal, where demand is expected to increase in the coming months. The conversion from iron ore to coal alone will call for an investment of Rs 150 crore but it is still to be decided if Ennore Port will bear the cost or if it would be done by the operator. How was your performance in terms of cargo handling?
 For 2013-14, the port has handled 24 mtpa cargo as against 17.89 mtpa during 2012-13. The company has reported a profit of Rs 147 crore on revenue of Rs 228 crore for the six months ended September 2013.


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